Tourism and Economic Growth in African Largest Economy

Mary Kehinde Salawu ()
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Mary Kehinde Salawu: University of Johannesburg, South Africa

Eurasian Journal of Economics and Finance, 2020, vol. 8, issue 2, 68-84

Abstract: The study examines the nexus between tourism and economic growth in Nigeria from 1995- 2017. Data were sourced from World Development Indicator and World Tourism Council data base online. Autoregressive distributed lag model (ARDL) was used in analyzing the data. The result of the Bounds test shows that the value of the F – statistics is greater than the value of the upper bound of the Pesaran, Chin and Smith statistics table at 1% level of significance, which showed that there is a long run relationship among economic growth (GRGDP), growth in the receipt from tourism (GRTR) and exchange rate (EXR). The long run result stipulates that there is no significant relationship between GRTR and GRGDP on one hand and LEXR and GRGDP on the other hand. In the short run, tourism had negative impact on Nigeria’s economic growth. The estimate indicates substantial role for time, previous state of the economy and tourism growth. While this result seems a contrast to theory, there may have been many factors connected to tourism development and practices which are anti-growth in the case of Nigeria. Furthermore, a percentage change in exchange rate reveals an ignorable though negative relationship with GRGDP. This may be due to uncertainty which surrounds exchange rate in a flexible regime. The study recommends that the government should invest in infrastructural facilities and tourist centers in order to boost economy of the country. Budgetary allocation can be channeled to tourism industry. Tax incentives to tourism firms should be encouraged.

Keywords: Tourism; Economic Growth; Autoregressive Distributed Lag Model; Nigeria (search for similar items in EconPapers)
Date: 2020
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